By Colby Cosh - Sunday, November 11, 2012 - 0 Comments
The Oilers’ owner faces a probe over his gift to the Alberta Tories
The public-relations problems continue to pile up for Daryl Katz, the drugstore magnate who wants a new downtown arena in Edmonton for his NHL Oilers to play in. It has been more than a year since Katz Group and the city’s council arrived at a “framework” for an arena funding deal, with Katz relenting on his insistence that the existing Rexall Place be pushed out of the concert business. That framework fell apart Oct. 18 after Katz made new demands and a previously sympathetic council ran out of patience, calling off negotiations and flinging the arena into limbo.
The city had made major concessions to get Katz to back off on the demand for a non-compete agreement with Northlands, the powerful non-profit that operates Rexall Place (i.e., the old Northlands Coliseum, which now bears the name of Katz’s main pharmaceutical brand). But the two sides remained $100 million short of the full amount for the new building—money that both insisted, despite an endless series of fairly strident refusals from the province and Ottawa, would eventually arrive courtesy of “another level of government.” Continue…
By Colby Cosh - Monday, October 29, 2012 at 10:20 AM - 0 Comments
City council holds off building a new Oilers arena
“It’s fairly apparent at this point that Daryl just isn’t that into us.” This wisecrack from Edmonton city Councillor Kerry Diotte concluded a chaotic Oct. 17 in city hall. Diotte has been a critic of the city administration’s deal with Edmonton Oilers owner Daryl Katz for a new downtown arena, but most of the council, including Mayor Stephen Mandel, thought the formula had been found. Katz was to supply just $100 million of the $450-million construction cost, providing maintenance over a 35-year lease. In exchange, the team was to get rent-free use of the building, revenue from all events, control of naming rights and other perks.
Last fall, Katz asked that his upfront $100 million be turned into an annuity of roughly $5.5 million a year over the lease period; the city acquiesced. It also agreed to pay the Oilers $20 million, supposedly to promote the city, over the first decade of the agreement. As the Canadian Taxpayers Federation pointed out, the naming rights alone would be worth somewhere between $3 million and $5 million a year. Katz’s net contribution to the building was already approaching zero.
Then last month the Katz Group informed the city that $450 million would no longer quite cover the building it wanted—and that, by the way, as arena operator it would need another $6-million annual subsidy. The city summoned Katz to an Oct. 17 meeting to explain. When he declined, council voted to suspend negotiations.
Anything is possible now. Before adjourning last week, councillors discussed building the arena according to the existing plan (which cost the city $30 million) or searching for savings. Renovating the existing Rexall Place for around $200 million, an idea long dismissed by Mandel’s bloc, is looking more attractive.
Either way, the Oilers’ lease runs out in 2014. Katz might choose to erect his own ice palace in the suburbs if he is liquid enough. Despite a net worth estimated at $2.4 billion, his miserliness suggests he may not be. (His retail pharmacy business is under regulatory pressure and he is known to have real estate in Vancouver’s flagging market.) If he can’t find a superior market for his NHL team—and no one knows of one—a fire sale may follow.
By Colby Cosh - Thursday, March 15, 2012 at 1:52 PM - 0 Comments
Just don’t ask Oilers’ billionaire owner Daryl Katz to pick up the tab
One hundred million dollars. A one, eight zeroes. That is what’s standing between the city of Edmonton and its planned new downtown home for the NHL’s Oilers. No big deal, say supporters of the space-age barn that would replace aging Rexall Place. That’s a fraction of the cost of a major highway overpass. Done right, say the starry-eyed, it could transform Edmonton’s infamously sleepy downtown. But where is the money going to come from? The city’s sweetheart deal with its richest citizen, Oilers owner and pharmacy billionaire Daryl Katz, left that $100-million gap to be shaded in through the largesse of “other levels of government.”
So far, those other levels have refused to consider it, and pretty convincingly, too. When Rexall Place (originally the Edmonton Coliseum) was built in 1974, the city got help from, among others, the federal agriculture department. But in government circles, the days of that kind of creativity are over. The federal government passed through a period of fiscal stimulus when the financial crisis hit, but wanted the money to go to “shovel-ready” projects. Edmonton’s dream palace didn’t even exist on paper yet.
The messages from under the dome of the Alberta legislature are largely the same now. Asked about the funding gap, Edmonton city manager Simon Farbrother says, “There continue to be informal discussions with the province,” and notes that a provincial election is around the corner in the spring. In an auction for votes, it is possible that new Premier Alison Redford might improvise anything. But Redford’s preferred branding, a close adviser warns, is about “people, not buildings.” Her predecessor, Ed Stelmach, was an old-fashioned pavin’ politician. Redford’s campaign focus—an unsurprising one for a human-rights lawyer—is expected to remain squarely on health, education, and seniors.